(Reuters) -India’s Tata Chemicals reported a rise in first-quarter profit on Friday, as lower expenses limited the impact of lower soda ash prices and subdued volumes.
The chemical maker’s consolidated net profit rose 87% to 2.52 billion rupees ($29.1 million) in the quarter ended June 30.
Its revenue from operations dropped 1.9% to 37.19 billion rupees. However, expenses declined at a faster rate of 3.4% to 36.21 billion rupees, on inventory gain and a drop in power and fuel expenses.
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KEY CONTEXT
Global soda ash prices, which account for two-thirds of Tata Chemicals’ sales volume, remained under pressure due to an oversupply from China. Prices of the chemical slumped about 34% during the April-June quarter, according to analysts at PL Capital.
Demand for flat and container glass, which uses soda ash in production, is steadily increasing in India, with Mordor Intelligence projecting a compounded annual growth rate of 5.42% through 2030.
However, heavy dumping of the chemical by Chinese exporters has sharply decreased prices. Analysts said anti-dumping investigations may result in safeguard duties, supporting domestic producers.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth (%) rating* analyst price yield
s target** (%)
Tata Chemicals 40.72 13.05 5.83 70.18 Sell 7 1.26 1.13
Deepak Nitrite 29.69 18.61 9.67 19.38 Hold 17 0.90 0.39
SRF 46.34 25.25 14.17 41.67 Hold 25 1.12 0.24
GHCL 9.28 5.12 3.08 5.78 Buy 2 0.69 1.94
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG
— $1 = 86.4850 rupees
(Reporting by Manvi Pant; Editing by Sherry Jacob-Phillips and Vijay Kishore)
